Highlight 11/2026: CEFTA Legal Framework and Dispute Resolution: Strengthening Economic Cooperation in the Western Balkans
Neda Milosavljevic, 1 April 2026
The Central European Free Trade Agreement (CEFTA) is a legal and institutional framework established in accordance with WTO rules and disciplines, supporting economic cooperation, trade liberalization and regional integration. Today, CEFTA consists of Albania, Bosnia and Herzegovina, the Republic of North Macedonia, Montenegro, Serbia, Moldova and the United Nations Interim Administration Mission in Kosovo (UNMIK) on Kosovo behalf. CEFTA was originally established in 1992 in Krakow by Poland, Hungary and the Czech Republic. Slovenia, Romania, Bulgaria, and Croatia joined later, but all of these countries subsequently left CEFTA upon acceding to the European Union.
At the core of CEFTA’s legal framework lies the obligation to establish a free trade area through the abolition of customs duties and removal of trade barriers and other distortions on most industrial goods and agricultural products, which have special regime. One of the eight main objectives of the Agreement is to foster investment through fair, clear, stable and predictable rules, with a particular focus on foreign investment by improving conditions within the Parties. Intellectual property should be harmonized according to international standards. The services sector dominates CEFTA’s GDP, accounting for approximately two thirds, particularly across travel, transport, construction, other business services, telecommunications and computer and information services. The levels of trade liberalization achieved by bilateral agreements among the Parties should be consolidated into a single CEFTA Agreement. Equitable competition should be promoted in foreign trade and investment, alongside the gradual opening of government procurement markets. Procedures for application and enforcement should be provided at the national level, therefore, the Parties have an obligation to contribute to international trade and development.
Annex 1 establishes the Joint Committee, composed of representatives of the Parties. As an administrative and supervisory body, the Joint Committee also settles any disputes that may arise among the Parties. The initial step involves direct consultations. Any dispute that remains unresolved may be referred to arbitration by any Party to the dispute through a written notification addressed to the other Party, with a copy of the notification sent to all CEFTA members. The award is based on the Agreement and the rules and principles of international law. Disputes under consultation or arbitration shall not be submitted to the WTO dispute settlement mechanism and the reverse. Annex 9 sets out the constitution and functioning of the Arbitral Tribunal. The Tribunal comprises three members: one designated by each Party to the dispute and a third member who shall be confirmed by both Parties. If no agreement is reached, a Party may request the Secretary General of the Permanent Court of Arbitration at The Hague to designate the appointing authority.
CEFTA is a pre-accession trade framework and since the EU holds exclusive competence over trade policy, the departure of previous members was necessary to avoid conflicts of competence with EU law. Today, CEFTA enhances stability, economic growth and EU integration in the Western Balkans and Moldova, providing for a specific dispute settlement mechanism. The Agreement aligns with the WTO legal framework, whether or not the Parties are members of the WTO. CEFTA ensures that member states can manage disputes, harmonize standards and uphold equitable competition.
Neda Milosavljevic, Highlight 11/2026: CEFTA Legal Framework and Dispute Resolution: Strengthening Economic Cooperation in the Western Balkans, 1 April 2026, available at www.meig.ch
The views expressed in the MEIG Highlights are personal to the authors and neither reflect the positions of the MEIG Programme nor those of the University of Geneva